Benchmarking Question

Your operational dept encounters production defect at the rate of 3 defects per 1000 lines of code. During a vendor meet you come across another company XYZ that is of the same size of yours and in the same industry. This company’s production defect is 2 defects per 1000 lines of code. Can you conclude that the XYZ operation dept is better that yours? Can you use this for benchmarking? Explain. (7 marks)

In Benchmarking we measure the performance of the best-in-class companies for each benchmark being considered – information source can be companies themselves, articles in the magazines, analysts in the market, clients and vendors etc. Although we can say that XYZ dept is doing better job then us, we need to benchmark with best-in Class in Industry.

We can take following steps.

· Identify the weak areas (Functional, Technical or Operational areas, in this case it is operational) in my operation department.

· Identify the key factors and variables with which to measure those functions

· Select the best-in-class companies for each area to be benchmarked – mainly companies that have highest customer satisfaction and optimized costs in these areas

· Measure your performance for each variable with the best-in-class companies for each benchmark being considered, to determine the gap between your firm and the best-in-class examples

· Identify those programs and actions to meet or exceed the benchmark based on a plan developed to enhance those areas that show potential for compliment.

· Implement these programs by setting specific improvement targets and deadlines. Also design a monitoring process to review and update the analysis over time.

· The process implemented in above step can be taken as basis for monitoring, revision and recalibration of measurements in future benchmarking studies.